RI scores another $190m in foreign loan

The Jakarta Post, JAKARTA | Wed, 03/25/2009 9:47 AM

Indonesia will receive an 18.6 billion yen (US$190 million) loan from Japan to fund programs to help improve the investment climate, alleviate poverty and build infrastructure, officials have announced.

The Rp 2.27 trillion loan, which was signed Tuesday, is divided into two parts, each worth Rp 1.13 trillion. The first part aims to support macroeconomic development, such as reducing poverty, while the second is aimed at improving infrastructure reform.

Krisiarto S. Legowo, the Foreign Ministry’s director of East Asia and Asia-Pacific affairs, said the first part of the loan would be a co-financing scheme between Japan and the International Bank for Reconstruction and Development (IBRD).

The second, similar scheme, will be between Japan and the Asian Development Bank, Krisiarto said, adding the requirements of the loan included a 0.7 percent annual interest rate, a repayment period of 15 years and a five-year grace period.

“The soft requirements and nonbinding procurement were the main reasons we accepted it,” he said.

“The government will include the loan in the state budget, and the National Development Planning Agency [Bappenas] will be in charge of the policies on its implementation."

Bappenas secretary Syahrial Loetan said the agency would earmark the loan to support efficiency in infrastructure development policies.

“What every investor wants when it comes to investing in a pro-ject are clear regulations and profitability,” Syahrial said.

“That’s why we'll use the loan [for programs to] produce clearer and more concise documents, such as feasibility studies, designs and land ownership issues, so that private investors find it easier investing in infrastructure development here.”

He added the Japanese government would also provide another loan worth around $728 million for infrastructure development.

“We will allocate around $57 million of the loan to fund the third phase of development of the Bandung Institute of Technology, and $494 million for the construction of the mass rapid transit [MRT] system, for instance. We plan to complete the signing of the loan by the end of March,” he said.

Syahrial added Japan was a vital economic partner and contributed a large portion of Indonesia’s loans.

“Japan contributes around 40 percent of Indonesia’s total foreign loans of $65 billion,” he said. (hdt)